Business Crimes Hotline

LOUISIANA

CITGO to Pay $13 Million Fine for Violating the Clean Water Act

CITGO agreed to pay a record-setting $13 million fine for negligently discharging pollutants into two rivers in Louisiana. The fine is the largest ever for a criminal misdemeanor violation of the Clean Water Act. According to the plea agreement, the company failed to maintain storm water tanks and adequate storm water storage capacity at its petroleum refinery in Sulphur, Louisiana. As a result, approximately 53,000 barrels of oil was discharged into the Indian Marais and Calcasieu Rivers following a heavy rainstorm. According to the DOJ, CITGO failed to start construction on a third storm water tank until 2005, even though the company had been warned that a third tank was needed as early as 1998. The company also failed to follow standard procedures for maintaining the tanks. In 2006, a heavy rainstorm overwhelmed the capacity of the two existing tanks and forced oil that had collected in the tanks out and into the two rivers. The illegal discharge impeded commercial transportation on the water ways for about 10 days. CITGO also agreed to implement an Environmental Compliance Plan, which requires new reporting requirements within the corporate structure regarding environmental issues and tank maintenance, the completion of the third storage tank, and the installation of new and more effective oil removal equipment for the storm water tanks.

NEW HAMPSHIRE

Tyco and Its Investors Seek to Freeze Former CEO's Assets

A U.S. District Judge temporarily ordered Dennis Kozlowski's assets frozen until a lawsuit against the former Tyco CEO is resolved. Tyco claimed that Kozlowski may be using a divorce settlement to hide money that he may be forced to pay back to the company and its investors. Kozlowski is currently serving an 8 1/3-to-25-year prison sentence following his conviction in New York for conspiracy, grand larceny, securities fraud, and falsifying business records. Kozlowski's assets were frozen in 2002, but the freeze was lifted after Kozlowski paid a $70 million fine and $98 million in restitution that were part of his sentence.

FLORIDA

30-Month Sentence for CIT Executive

Christian Sapsizian, a French citizen and former Alcatel CIT (Alcatel) executive, was sentenced to 30 months' imprisonment for violating the Foreign Corrupt Practices Act (FCPA). As a part of his sentence, he must also forfeit $261,500 and serve three years of supervised release. Sapsizian was convicted of bribing officials of Costa Rica's state-owned telecommunications authority in order to obtain a lucrative mobile-phone contract for Alcatel. He allegedly directed payments to a board director for Instituto Costarricense de Electricidad (ICE), the state-run telecommunications authority in Costa Rica, which was responsible for awarding all telecommunications contracts. The ICE official was an adviser to a senior Costa Rican government official who also received a portion of Sapsizian's payments. The payments were intended to induce the officials to influence the bid process in Alcatel's favor. The corrupt payments are estimated to have been for more than $2.5 million, and the contact Alcatel obtained was worth $149 million.

LOUISIANA

CITGO to Pay $13 Million Fine for Violating the Clean Water Act

CITGO agreed to pay a record-setting $13 million fine for negligently discharging pollutants into two rivers in Louisiana. The fine is the largest ever for a criminal misdemeanor violation of the Clean Water Act. According to the plea agreement, the company failed to maintain storm water tanks and adequate storm water storage capacity at its petroleum refinery in Sulphur, Louisiana. As a result, approximately 53,000 barrels of oil was discharged into the Indian Marais and Calcasieu Rivers following a heavy rainstorm. According to the DOJ, CITGO failed to start construction on a third storm water tank until 2005, even though the company had been warned that a third tank was needed as early as 1998. The company also failed to follow standard procedures for maintaining the tanks. In 2006, a heavy rainstorm overwhelmed the capacity of the two existing tanks and forced oil that had collected in the tanks out and into the two rivers. The illegal discharge impeded commercial transportation on the water ways for about 10 days. CITGO also agreed to implement an Environmental Compliance Plan, which requires new reporting requirements within the corporate structure regarding environmental issues and tank maintenance, the completion of the third storage tank, and the installation of new and more effective oil removal equipment for the storm water tanks.

NEW HAMPSHIRE

Tyco and Its Investors Seek to Freeze Former CEO's Assets

A U.S. District Judge temporarily ordered Dennis Kozlowski's assets frozen until a lawsuit against the former Tyco CEO is resolved. Tyco claimed that Kozlowski may be using a divorce settlement to hide money that he may be forced to pay back to the company and its investors. Kozlowski is currently serving an 8 1/3-to-25-year prison sentence following his conviction in New York for conspiracy, grand larceny, securities fraud, and falsifying business records. Kozlowski's assets were frozen in 2002, but the freeze was lifted after Kozlowski paid a $70 million fine and $98 million in restitution that were part of his sentence.